Despite scattered signs of improvement, the global economic scenario continues to be challenging. After a marked slowdown in 2011, global economic growth remained tepid in 2012, with most countries expanding at a pace below potential. 2012 saw the jobs crisis continue in the face of subdued growth with global unemployment still above its pre-crisis level. Most developed economies are still struggling to overcome the economic woes originating from the financial crisis. As per a UN report, four major interconnected weaknesses continue to conspire against any robust economic recovery:

• Continued deleveraging by banks, firms and households is holding back normal credit flows and consumer and investment demand.
• Persistently high unemployment is both cause and effect of the lack of economic recovery.
• Fiscal austerity responses to deal with rising public debts are further deterring economic growth, which in turn is making a return to debt sustainability more difficult.
• Bank exposure to sovereign debts and the weak economy are perpetuating financial sector fragility, which in turn is spurring continued deleveraging.

Developed countries, especially in Europe, continue to struggle to break through this vicious circle.

GDP growth in major economic regions
The short-term outlook for the economy of the EU and the eurozone remains fragile. But GDP growth is expected to gradually return in 2013, with further strengthening in 2014. Real GDP is set to contract by 0.3% in the EU and by 0.4% in the eurozone in 2012. The economy of the United States started 2012 on a positive note, as per the IMF, expanding at an annualised rate of 2% in Q3. The jump can be part attributed to a large increase in government spending. Housing is recovering, with existing home sales at their best rate since the 2008 crisis. But businesses are cutting back again over worries about the debt crisis in Europe and the looming �fiscal cliff� in the US. By Jan 1, unless steps are taken, automatic budget cuts are set to take place, and tax cuts, as well as a temporary cut in the payroll tax, will expire creating a new drag on the economy. This will not only adversely impact the GDP growth of USA, but would create a ripple effect on the global economy in 2013 due to its lion share (about 20%) of the World economy

International Monetary Fund (IMF) in its October 2012 overview of the World economic outlook projections (given below) clearly suggest that global economy in 2012 would be lower than 2011. All economic regions are expected to be weaker in 2012 compared to 2011.  BRICS economic countries, which have been growing well in the last few years, are also going to be weaker in 2012. Further IMF is hopeful that global economy in 2013 would be better than 2012.

Japan’s GDP contracted 0.90% in Q3-2012, shrinking for the first time since 2011, adding to signs that slowing global growth and tensions with China are nudging the world's third-largest economy into recession. Sony Corp and Panasonic Corp have slashed spending plans to cope with massive losses as they struggle with competitive markets and a strong yen. China could attain government's economic growth target of 7.5% for 2012. China's growth has been crimped by a slow recovery in USA and a lingering financial crisis in the European Union - the two biggest markets for its goods. Beijing has implemented certain policies in 2012- interest rate cuts, freeing more cash for lending and approvals for infrastructure projects - in an effort to underpin an economy currently caught in its slackest period of activity since the 2008-09 global financial crisis. The IMF has slashed India’s growth forecast to 4.9% for 2012 due to low business confidence and sluggish structural reforms. Activity suffered from waning business confidence amid slow approvals for new projects, sluggish structural reforms, policy rate hikes designed to rein in inflation and flagging external demand. Growth weakened more than expected in H1-2012, an outcome of stalled investment caused by governance issues and a deterioration in business sentiment against the backdrop of a rising current account deficit and the rupee depreciation. The biggest disappointment for 2012 was Brazil- Its Central Bank cut its GDP growth forecast for 2012 from 1.6% to 1%, confirming a marked slowdown in Latin America's biggest economy. It was the third downward revision by the Bank this year: from 3.5% in early 2012 to 2.5% in June, then down to 1.6% in September and to 1% this month.